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Red Robin's "North Start" five-point plan is aimed at improving operations, cost structures and the guest experience.

How Red Robin is positioning itself for a comeback

Red Robin unveiled a five-point plan to get back to revenue, unit and guest satisfaction growth.

Red Robin’s opening video at the ICR Conference this week included a song that repeated the lyrics, “are you ready for the comeback?” CEO CJ Hart outlined exactly what that means, noting “the harsh realities” of Red Robin and how it will overcome them.

Many of those realities began to manifest around 2016 to 2017, when Hart said guest satisfaction scores and revenues began to decline. He points to the degradation of food quality, labor reductions that impacted guest and employee experiences, and under investment in the business as the biggest challenges.

“One of these would have hurt a company long term. All of these challenges together probably would have put a brand out of business,” he said. But, because of Red Robin’s loyal guest base and iconic brand, that was not the case. And so, an opportunity has presented itself for that comeback and Hart unveiled a “North Star” five-point plan to do just that. The plan consists of a transformation to an operations-focused company, elevating the guest experience, removing costs and complexity, optimizing guest engagement, and driving revenue and profitability. On the operations side, for instance, the company brought back bussers and kitchen managers and reprioritized the expo station.

“In early 2018, the company got rid of bussers. When you take the bussers out, the servers have more work to do,” Hart said. “The second thing they did is the kitchen manager role was eliminated to become more generalists within the restaurant. We serve food, it’s imperative that you have kitchen managers. Those things start to affect the company.”

Red Robin is looking for new ways to incent and reward operators to drive results and, Hart said, it will adhere to an inverted model where operators drive decisions at the unit level.

“We will listen to (frontline operators) and we will compensate them,” he said. “We think that will change this organization in the long term.”

 The company itself has plenty of incentive to focus on unit-level operations; its top-performing restaurants have dramatically higher sales, traffic and guest satisfaction levels than its lower-performing units.

“Never in my 40 years in this business have I seen this much of a difference between the top quartile versus the bottom quartile,” Hart said. “The top has 38% higher comps, 32% better traffic and 7% higher guest satisfaction levels. They have longer tenured managers. Those are significant. That creates hope and possibilities of where we can go with this brand.”

The menu is also a priority and Hart said the company is investing in new flat-top grills to both improve its core burgers and create opportunities for additional innovation, including healthier appetizer options.

“We are going to invest in becoming the best at gourmet burgers. By changing out our cooking platform, it’s quicker and a better-quality product,” he said. “Our cooking platform was created in the fast-food industry. It’s belt-driven. If you have gourmet burgers and a promise to have the best burgers in the casual dining space, you have to look at yourself in the mirror and ask if you’re executing on that.”

Red Robin will also work to improve guest engagement, which has traditionally been a strength of the brand, Hart said. In doing so, the company is going to get back to a local community brand mentality.

“We’re going to support the communities we serve and continue to be engaged in those communities versus trying to be a national company with national digital media,” he said. "In all of the history of Red Robin, that’s how we’ve performed well – by a word-of-mouth experience.”

The five-point plan is extensive to be sure, but Hart has confidence that the 511-unit chain will get back to its heyday.

“I’ve been with the company now for four months and I’m more excited now than when I started,” he said. “Transformations are difficult, and you need time to do them, (but) there are fundamental things in this brand that are powerful that we can bring back to life … It gives me an incredible amount of enthusiasm about what can be done.”

Contact Alicia Kelso at [email protected]

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